Don’t try to non-compete me!

It can be extremely frustrating to see your star employee, who you’ve nurtured and developed over the years, leave to work for your bitter competitor down the road. They take with them your trade secrets, client contacts, and business plans, while leaving your firm with a gaping hole in operations. Employers often try to prevent departing employees from working for the competition through “non-compete” clauses in the employment contract.

Preventing such departures is a major concern for many businesses, but at the same time runs contrary to the free mobility of labor. Whether such clauses are enforceable depends on the jurisdiction you’re in.

In Cambodia, the tension between the two is resolved decidedly in favor of the employee, Article 70 of the Labor Law:

“any clause of a contract that prohibits the worker from engaging in any activity after the expiration of the contract is null and void.”

That’s a very strong rule in favor of the employee. As Cambodia does not have a law on trade secrets, it’s really important to include a non-disclosure agreement in the initial employment contract, and remind the departing employee of it during their exit interview. Otherwise, there’s not a whole lot you can do to prevent them from using all that valuable information to the benefit of your competitor.

If your employee left before the end of their contract, you can sue him for damages. The law gives the judge wide discretion in setting the damages, which can be difficult for the employer to quantify.

There is a small consolation in that if you can prove that the new employer encouraged your employee to break their contract and move jobs (aka poaching or solicitation), then the worker and new employer are jointly liable for your damages. This can be tough to prove, and the employee will still likely be able to work for your competitor.

The take-home lesson is to include an NDA, and make sure your employee and her new employer know you’re serious about enforcing it.

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The work of a handful of attorneys at BNG Legal, this blog's mission is to keep the world up-to-date on legal issues in the Kingdom of Cambodia.

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Cambodian Law Today is for educational purposes and to give general information and a general understanding of the law; it is not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and this blog or any of the people or firms behind it. Do NOT use this blog as a substitute for competent legal advice from a licensed professional attorney qualified in the relevant jurisdiction.